[Federal Register Volume 69, Number 135 (Thursday, July 15, 2004)]
[Rules and Regulations]
[Pages 42341-42345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16075]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 147
[FRL-7788-1]
State of Alabama; Underground Injection Control Program Revision;
Response to Court Remand
AGENCY: Environmental Protection Agency.
ACTION: Final determination on court remand on final rule.
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SUMMARY: In this document, the Environmental Protection Agency (EPA) is
providing its response to the Eleventh Circuit Court of Appeals' remand
in Legal Environmental Assistance Foundation, Inc. v. United States
Environmental Protection Agency (11th Cir. 2001) (hereinafter LEAF II),
directing EPA to determine whether Alabama's revised underground
injection control (UIC) program covering hydraulic fracturing of coal
bed seams to recover methane gas complies with the requirements for
Class II wells. In LEAF II, the Eleventh Circuit affirmed EPA's
decision to review Alabama's hydraulic fracturing program pursuant to
the approval criteria in section 1425 of the Safe Drinking Water Act
(SDWA), instead of the approval criteria in section 1422 of the SDWA,
and rejected LEAF's claim that EPA's approval of the program pursuant
to section 1425 was arbitrary. However, the Court remanded the matter,
in part, for EPA ``to determine whether Alabama's revised UIC program
complies with the requirements for Class II wells.'' After issuing a
proposed response in the April 8, 2004, Federal Register and receiving
comments on that proposal, EPA has determined that the hydraulic
fracturing portion of the State's UIC program relating to coal bed
methane production, which was approved under section 1425 of the SDWA,
complies with the requirements for Class II wells within the context of
section 1425's approval criteria.
ADDRESSES: Documents relevant to this action are available for
inspection at a docket, which is located at U.S. Environmental
Protection Agency, Region 4, Water Management Division, Ground Water
and Drinking Water Branch, Sam Nunn Atlanta Federal Center, 61 Forsyth
Street, SW., Atlanta, Georgia 30303. The docket may be accessed between
8 a.m. and 5 p.m., Monday through Friday, excluding legal holidays. A
reasonable fee may be charged for copying.
FOR FURTHER INFORMATION CONTACT: General questions, and questions on
technical issues concerning today's document should be directed to
Larry Cole at (404) 562-9474, or at the address listed in the ADDRESSES
section. Questions on legal issues concerning today's document should
be addressed to Zylpha Pryor, Office of Environmental Accountability,
U.S. Environmental Protection Agency--Region 4, 61 Forsyth Street, SW.,
Atlanta, Georgia 30303; telephone (404) 562-9535.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background Information
A. Court Decisions
B. Section 1425 of the SDWA
II. EPA's Response to Court Remand
III. EPA's Response to Public Comments
I. Background Information
A. Court Decisions
On May 3, 1994, the Legal Environmental Assistance Foundation,
Inc., (LEAF) submitted a petition to EPA to withdraw Alabama's UIC
program, asserting that the State was not appropriately regulating
injection activities associated with coal bed methane gas production
wells. Following the Agency's May 5, 1995, denial of the petition, LEAF
sought review of this decision by the United States Court of Appeals
for the Eleventh Circuit. On August 7, 1997, in LEAF v. EPA, 118 F. 3d
1467 (11th Cir. 1997) (LEAF I), the Court held that hydraulic
fracturing activities constitute underground injection under Part C of
the SDWA and must be regulated by permit or rule. On February 18, 1999,
the Eleventh Circuit directed EPA to implement the Court's August 1997
decision. The Court established a schedule for EPA to follow in
determining whether, in light of the Court's ruling regarding hydraulic
fracturing, EPA should withdraw approval of Alabama's UIC program. In a
January 19, 2000, Federal Register final rule, EPA announced its
determination that Alabama's UIC program regulating hydraulic
fracturing associated with coal bed methane production was consistent
with the requirements of the SDWA and the LEAF I Court mandate (65 FR
2889, January 19, 2000).
LEAF filed a petition for review of EPA's determination with the
Eleventh Circuit Court, arguing that it should be set aside for three
reasons. First, LEAF argued that the underground injection of hydraulic
fracturing fluids to enhance the recovery of methane gas from coal beds
is not underground injection for the secondary or tertiary recovery of
natural gas under section 1425 of the SDWA. Second, LEAF contended that
wells used for the injection of hydraulic fracturing fluids to enhance
the recovery of methane gas from coal beds are Class II wells as
defined in 40 CFR 144.6(b), and EPA's classification of hydraulic
fracturing as a ``Class II-like underground injection activity'' was
not in accordance with law. Third, LEAF argued that, even if Alabama's
revised UIC program was covered by the alternative approval procedure
of section 1425, EPA's approval of the revised program was arbitrary
and capricious. The Eleventh Circuit generally ruled in favor of EPA,
holding that: (1) EPA's decision to approve Alabama's hydraulic
fracturing program pursuant to section 1425 of the SDWA was a
permissible construction of the statute; and (2) EPA was not arbitrary
in determining that Alabama's UIC program complies with the section
1425 statutory approval requirements. LEAF II, 276 F.3d at 1260-61,
1265. However, the Court remanded, in part, for EPA to determine
whether Alabama's revised program covering the hydraulic fracturing of
coal beds to produce methane complies with the requirements for Class
II wells. Id. at 1264. The purpose of this document is to announce
EPA's determination regarding the remanded issue.
B. Section 1425 of the SDWA
Any State that seeks to acquire primary enforcement responsibility
for the regulation of Class II wells may, at its option, apply for
primacy for its Class II UIC program under the approval criteria in
either section 1422 or section 1425 of the SDWA. Approval under either
section is aimed at achieving the same fundamental objective of
[[Page 42342]]
protecting underground sources of drinking water from endangerment by
well injection. However, State program approvals under section
1422(b)(1) of the SDWA are required to meet a different legal standard
than State program approvals under section 1425. Section 1425 was added
as part of the 1980 amendments to the SDWA to offer States an approval
alternative that was not necessarily tied to the detailed regulatory
requirements for Class II wells found at 40 CFR parts 124, 144, 145,
and 146.
Approval under section 1422(b)(1)(A) requires that the State UIC
program meet the requirements of regulations in effect under section
1421. Those regulations, which are found at 40 CFR parts 124, 144, 145,
and 146, are very detailed and specific. However, under the alternate
section 1425 approval criteria, a State may instead demonstrate that
the Class II portion of its UIC program meets the requirements of
section 1421(b)(1)(A) through (D) and represents an ``effective''
program to prevent injection which endangers drinking water sources. A
State has more flexibility in developing a section 1425-approvable
Class II program than if it were developing the same program for
approval under section 1422. Similarly, EPA has more discretion to
approve a Class II program under the section 1425 criteria, because
that program does not have to ``track'' or be ``as stringent as'' each
of the Class II-related requirements of 40 CFR parts 124, 144, 145, and
146. See 40 CFR 145.11(b)(1). If a State makes a satisfactory
demonstration pursuant to section 1425 that its Class II program
warrants approval, it has done all that is required to demonstrate that
its program complies with the requirements for Class II wells.
II. EPA's Response to Court Remand
During the hydraulic fracturing process, fracturing fluids are
injected through methane production wells to create fractures in the
formation through which methane flows to the well and up to the
surface. In its January 19, 2000, Federal Register final rule approving
Alabama's UIC program revisions, EPA characterized hydraulic fracturing
for the production of coal bed methane as a ``Class II-like underground
injection activity.'' In the final rule, EPA acknowledged that its
classification scheme recognizes only five classes of wells. However,
EPA stated that, since the injection of fracture fluids is often a one-
time exercise of extremely limited duration and was ancillary to the
well's principal function of producing methane, it did not seem
entirely appropriate to ascribe full Class II status to that activity.
EPA also based its Alabama well classification decision on the fact
that the general UIC ``well classification systems found in 40 CFR
144.6 and 146.5 do not expressly include hydraulic fracturing'' and
``the various permitting, construction, and other requirements found in
parts 144 and 146 do not specifically address hydraulic fracturing.''
65 FR 2892. It is still the case today that EPA has not promulgated
national regulations expressly and specifically designed to establish
minimum requirements for State programs that regulate hydraulic
fracturing of coal beds to enhance methane production.
The LEAF II Court found EPA's classification of Alabama's
hydraulically fractured coal bed methane wells as ``Class II-like'' to
be inconsistent with the plain language of 40 CFR 144.6, which defines
Class II injection wells. In its opinion, the Court held that, even
though the injection of fracture fluids is often a one-time exercise of
extremely limited duration, ``wells used for the injection of hydraulic
fracturing fluids fit squarely within the definition of Class II
wells.'' LEAF II, 276 F.3d at 1263; see also 40 CFR 144.6(b)(2). In
view of its finding that the wells are Class II wells, the Court
remanded, in part, for EPA to determine whether Alabama's revised UIC
program complies with the requirements for Class II wells.
In applying for approval of that part of its Class II UIC program
regulating hydraulic fracturing of coal beds, Alabama could have sought
primacy either under section 1422 or section 1425 approval criteria of
the SDWA. Since Alabama chose to make its demonstration pursuant to
section 1425, EPA appropriately evaluated that part of Alabama's Class
II program regulating hydraulic fracturing of coal beds using the
section 1425 alternative approval requirements.
To receive approval for its Class II program, or some component
thereof, under the optional demonstration, section 1425 requires a
State to show that its program meets the following five criteria: (1)
Section 1421(b)(1)(A) provides that the State program must prohibit any
underground injection which is not authorized by permit or rule; (2)
section 1421(b)(1)(B) provides that the State program must require that
the applicant for a permit satisfy the State that the underground
injection will not endanger drinking water sources and prohibits the
State from promulgating any rule that authorizes underground injection
which endangers drinking water sources; (3) section 1421(b)(1)(C)
requires that the State program include inspection, monitoring,
recordkeeping, and reporting requirements; (4) section 1421(b)(1)(D)
provides that the State program must apply to underground injections by
Federal agencies, as well as underground injections by any other
person, whether or not occurring on property owned or leased by the
United States; and (5) the State program must represent ``an effective
program'' to prevent underground injection which endangers drinking
water sources, in accordance with section 1425(a). If a State can
successfully demonstrate that its Class II program satisfies all of
these requirements, the program has met all the statutory requirements
for approval. As previously discussed, under section 1425, that
program, or a component thereof, does not have to demonstrate that it
contains requirements as stringent as, or identical to, each of the
specific Class II requirements found in 40 CFR parts 144 and 146 of
EPA's regulations. Instead, a finding that such a program, or component
thereof, meets the Class II approval requirements of section 1425 means
that such a program, by virtue of that finding, necessarily complies
with all applicable statutory and regulatory requirements for Class II
wells.
EPA's determination that Alabama's hydraulic fracturing program
related to coal bed methane production complied with the section 1425
requirements for Class II program approval was explained in great
detail in the January 19, 2000, Federal Register final rule. The LEAF
II Court held that EPA's determination that Alabama's UIC program
complies with the SDWA's statutory requirements was not arbitrary. LEAF
v. EPA, 276 F.3d at 1265. EPA did not reopen that earlier approval
decision or solicit additional comment on it. EPA only sought comment
on its proposed response to the LEAF II Court's question on remand.
In reviewing and approving Alabama's coal bed methane-related
hydraulic fracturing program, EPA was cognizant of the various
regulatory provisions in 40 CFR parts 144 and 146, which are designed
to prevent Class II injection wells from causing the movement of fluid
containing any contaminant into a USDW. EPA generally expects
traditional State Class II programs, i.e., those regulating the
injection of fluids brought to the surface either in connection with
conventional oil and gas production or for enhanced recovery or storage
of oil and gas, to demonstrate their ``effectiveness'' to prevent
underground injection which endangers USDWs, pursuant to Section 1425,
by inclusion of statutory or
[[Page 42343]]
regulatory provisions preventing fluid movement. EPA was concerned that
according ``full'' Class II status to Alabama's hydraulically-fractured
methane production wells could have been misconstrued as requiring a
strict application of those ``no fluid movement'' provisions and could
have unnecessarily impeded methane gas production in Alabama within the
meaning of SDWA section 1441(b)(2) because Alabama's revised program
allowed injection of fracturing fluids into USDWs, provided they did
not cause a violation of any MCL or otherwise adversely affect the
health of persons. LEAF v. EPA, F.3d at 1264 n.12; EPA brief at 30-31.
EPA thus decided to characterize wells used to inject hydraulic
fracturing fluids into Alabama's coal bed formations as ``Class II-
like,'' rather than Class II. However, this characterization of
Alabama's hydraulically-fractured methane production wells, while
designed to further ensure that regulation of those wells did not
unnecessarily interfere with or impede methane gas production, was
unnecessary for purposes of EPA's approval. EPA's decision to approve
Alabama's regulation of these wells pursuant to section 1425 is due in
part to the unique attributes of hydraulic fracturing in Alabama, as
well as to EPA's substantive finding, which was upheld by the LEAF II
Court, that Alabama's program does not endanger USDWs because, among
other requirements, the injection must not cause a violation of any MCL
or otherwise adversely affect the health of persons. EPA thus
appropriately exercised the discretion and flexibility inherent in SDWA
section 1425 to approve Alabama's coal bed methane-related hydraulic
fracturing program despite the fact that it does not prohibit fluid
movement into USDWs because: (1) EPA's Class II regulations were not
designed to, and do not specifically address the unique technical and
temporal attributes of hydraulic fracturing, and (2) more importantly,
EPA determined pursuant to section 1425 that Alabama's program is
effective at preventing endangerment of USDWs.
In sum, the SDWA gives Alabama more flexibility in developing a
section 1425-approvable Class II program for the hydraulic fracturing
of coal beds to produce methane than if it were developing the same
program for approval under the criteria in section 1422. Similarly, EPA
has more discretion to approve Alabama's revised Class II program
relating to coal bed methane production under the criteria in section
1425, because that program does not have to ``track'' or be ``as
stringent as'' each of the Class II-related requirements of 40 CFR
parts 124, 144, 145, and 146. See 40 CFR 145.11(b)(1). Because Alabama
made a satisfactory demonstration pursuant to section 1425 that its
coal bed methane-related hydraulic fracturing program warranted
approval, it did all that was required to demonstrate that its program
complies with the requirements for Class II wells.
III. EPA's Response to Public Comments
Summary of Comments
All of the commenters except one supported EPA's determination. One
pointed out that the States, which have decades of regulatory
experience in protecting ground water from drilling activities, have
supervised the fracturing of nearly a million wells without a single
occurrence of harm to ground water. This and other statistics were
cited by several commenters as evidence of the strength of the State
regulatory programs and, conversely, of the lack of need for additional
Federal regulation. One commenter noted that any additional regulation
would impede production. Another commenter mentioned that because of
the unique aspects of hydraulic fracturing as compared to traditional
Class II activities, additional Federal regulations, or the application
of Class II requirements at the national level on hydraulic fracturing,
is unnecessary and would only result in increased costs to the Federal
and State governments, as well as to oil and gas operators, with no
additional environmental benefit. One commenter found the distinction
between classification of hydraulic fracturing wells as Class II or
Class II-like to be of no importance given approval under 1425, while
another took issue with the holding in LEAF I, which defined hydraulic
fracturing as underground injection under Part C of the SDWA. Overall,
the supportive submittals were perhaps best summarized by the commenter
who stated that EPA's response demonstrates a ``* * * convergence of
sound legal reasoning with clear environmental and economic benefits.''
EPA appreciates the comments supportive of its determination and
does not believe that they need a response. Those comments regarding
decisions already made by the Eleventh Circuit Court are beyond the
scope of the remanded issue and therefore do not require a response.
One commenter did not support EPA's determination on the remand.
The commenter stated that Alabama's revised underground injection
control program for hydraulic fracturing of coalbeds to produce methane
gas failed to demonstrate (1) that permit applicants are required to
``satisfy the State that underground injection will not endanger
drinking water sources'' and (2) ``that the program represents an
effective program to prevent underground injection which endangers
drinking water sources.'' Additionally, it said that Alabama's revised
program ``does not comply with the requirements for Class II wells.''
The commenter stated that, despite the general requirement in EPA's
UIC rules that all new Class II wells shall be sited in such a fashion
that they inject into a formation which is separated from any
underground source of drinking water by a confining zone that is free
of known open faults or fractures within the area of review (40 CFR
146.22(a)), the Alabama program allows hydraulic fracturing fluids to
be injected directly into underground sources of drinking water. The
commenter also cited a number of other provisions of EPA's UIC rules
that the commenter said would ``impose technical requirements for `good
engineering' practices designed to prevent movement of fluids into
underground sources of drinking water,'' e.g., 40 CFR 146.23(a),
144.28(f)(6)(ii), 144.52(a)(3), 144.52(a)(9). The commenter noted that
``EPA previously found these technical requirements necessary to
effectuate the preventive and public health protective purposes of the
Act. 45 FR 42472, 42478 (1980).'' The commenter continued to say that
Alabama's requirement that well operators certify that the hydraulic
fracturing fluid injectate does not exceed MCLs for drinking water is
not sufficient to satisfy the State that the injection will not
endanger drinking water sources and does not represent an ``effective
method'' to prevent endangerment. A list of constituent hydraulic
fracturing fluids that have been used in Alabama was submitted by the
commenter, which pointed out that MCLs have been established for only
four of the 50 hydraulic fracturing fluid constituents it identified.
Moreover, the commenter indicated that an operator's MCL certification
did not address whether contaminants in the hydraulic fracturing fluid
``may adversely affect the health of persons.'' It said the Alabama
program does not require that the operator or the State Oil and Gas
Board of Alabama ensure that injection will not adversely affect the
health of persons.
Absent implementation criteria and assignment of implementation
responsibility, the commenter stated, the statutory proscription
against
[[Page 42344]]
contamination which ``may adversely affect the health of persons'' is
likely to be ignored by the operator and the State Oil and Gas Board of
Alabama until after complaints are received that drinking water
supplies have been contaminated. Then, the commenter continued, the
proscription will be invoked only to justify the imposition of
additional requirements for corrective action as are necessary to
prevent a further threat to the health of persons. The commenter
believes that this outcome ``is even more likely'' given ``Alabama's
and EPA's reluctance to regulate hydraulic fracturing.''
At the outset, EPA must point out that to the extent these comments
assert that Alabama's revised underground injection control program for
hydraulic fracturing of coalbeds failed to demonstrate that such
underground injection ``will not endanger drinking water sources'' and
that Alabama's revised program does not represent an ``effective
program to prevent underground injection which endangers drinking water
sources,'' they merely repeat claims made by LEAF during its challenge
in the Eleventh Circuit Court of Appeals to EPA's January 2000 approval
of Alabama's program. In its December 21, 2001, opinion generally
upholding that approval, the Eleventh Circuit observed that LEAF had
made a number of arguments in support of its contention that EPA had
arbitrarily approved Alabama's program, including that ``Alabama's
revised UIC program fails to require that a permit applicant satisfy
the state that underground injection will not endanger underground
sources of drinking water'' and that ``Alabama's revised UIC control
program does not represent an effective program to prevent underground
injection which endangers drinking water sources.'' LEAF v. EPA, 276
F.3d 1253, 1265 n.13 (11th Cir. 2001). The court said it ``carefully
considered'' each of LEAF's arguments and concluded that ``none of
these arguments would support setting aside the agency's determination
in this case.'' EPA believes that these reasserted, generalized
critiques of Alabama's approved program are beyond the limited scope of
the Court's remand and does not believe that further response to such
critiques is necessary.
More relevant to the issue on remand is the commenter's claim that
Alabama's revised UIC program ``does not comply with the requirements
for Class II wells.'' In support of that claim, a number of provisions
are cited in CFR parts 144 and 146 that apply to Class II wells: 40 CFR
146.22(a), 146.23(a), 144.28(f)(6)(ii), 144.52(a)(3), and 144.52(a)(9).
The commenter says that each of these regulatory provisions is designed
to prevent movement of fluids containing contaminants into underground
sources of drinking water and criticizes Alabama's program for allowing
hydraulic fracturing fluids to be injected into underground sources of
drinking water.
It is true that Alabama's revised UIC program regulating hydraulic
fracturing of coalbed formations (1) allows, under certain limited
circumstances, the injection of hydraulic fracturing fluids into
underground sources of drinking water and (2) does not contain State
regulatory provisions analogous to the CFR part 144 and part 146
provisions cited by LEAF. This does not mean, however, that Alabama's
program does not comply with the requirements for Class II wells. As
EPA explained at length in its April 2004 proposed determination on
remand and again in this document, a State UIC program seeking approval
under the alternate SDWA section 1425 approval criteria ``does not have
to `track' or be `as stringent as' each of the Class-II-related
requirements of 40 CFR parts 124, 144, 145, and 146.'' 69 FR 18478,
18479 (April 8, 2004). The commenter does not dispute this in its
assertions. Accordingly, the fact that certain provisions of 40 CFR
parts 144 and 146 have been identified that are not found in Alabama's
revised program does not render that program out of compliance with the
requirements for Class II wells.
Nor is it problematic that Alabama requires a certification in
writing that ``the mixture of fluids to be used to hydraulically
fracture the coal beds does not exceed the maximum contaminant levels
contained in 40 CFR part 141, subparts B and G. Alabama Rule 400-3-
8-.03(2)(b)(3). It is true that Alabama's certification requirement
addresses MCL exceedences, and not whether the operator believes
hydraulic fracturing fluid injection will ``adversely affect the health
of persons.'' However, this does not mean that the certification
requirement is insufficient or ineffective. Alabama's certification
requirement must be viewed in the larger context of the program's
requirements as a whole. Significantly, the Alabama program expressly
requires that each coal bed be hydraulically fractured ``so as not to
endanger any underground source of drinking water (USDW).'' Alabama
Rule 400-3-8-.03(1). If endangerment occurs despite this prohibition,
the well must be plugged and abandoned and remediation of the USDW may
be required. Alabama Rule 400-3-8-.03(1). Moreover, the Alabama program
expressly provides that coal beds shall not be hydraulically fractured
in a manner that allows the movement of fluid containing any
contaminant into a USDW, if the presence of that contaminant may cause
an exceedence of an MCL or ``otherwise adversely affect the health of
persons.'' Alabama Rule 400-3-8-.03(2). So, while the certification
requirement does not specifically address whether injected contaminants
may ``adversely affect the health of persons,'' the program's
fundamental regulatory requirements, as expressly stated in Alabama
Rule 400-3-8-.03(1) and (2), prohibit any hydraulic fracturing (within
or outside a USDW) that may ``adversely affect the health of persons.''
This prohibition embodies the SDWA's endangerment test in 42 U.S.C.
300h(d). Under Alabama law an operator cannot simply inject ``any
quantity'' of a hydraulic fracturing fluid's constituent chemicals into
a USDW without regard to whether such injection would violate Alabama
Rule 400-3-8-.03(1) and (2) and ``adversely affect the health of
persons.'' Contrary to the commenter's view, the Alabama program does
require that the operator and the State Oil and Gas Board of Alabama
ensure that injection will not ``adversely affect the health of
persons.'' It does that by requiring written permission to inject and
expressly prohibiting any injections that might ``adversely affect the
health of persons.'' And the Eleventh Circuit has found that Alabama's
program was ``effective'' for purposes of 42 U.S.C. 300h-4(a).
The commenter asserts that Alabama's approved program lacks
sufficient implementation criteria and assignment of implementation
responsibility. EPA disagrees. The program's fundamental criteria are
clear: no hydraulic fracturing that endangers USDWs, exceeds MCLs, or
may ``otherwise adversely affect the health of persons.'' EPA strongly
disagrees with the claim that these prohibitions are likely to be
ignored by the operator and State Oil and Gas Board of Alabama. Nothing
in the record supports that assertion. The placement of implementation
responsibility upon the State Oil and Gas Board of Alabama is also
clear.
EPA believes the State of Alabama's hydraulic fracturing regulatory
program, with its regulatory criteria, technical review process, and
written approval procedures, continues to be effective in preventing
endangerment to underground sources of drinking water.
Conclusion: EPA has determined that the hydraulic fracturing
portion of the State's UIC program relating to coal bed methane
production, which was
[[Page 42345]]
approved under section 1425 of the SDWA, complies with the requirements
for Class II wells within the context of section 1425's approval
criteria.
Dated: July 9, 2004.
Benjamin H. Grumbles,
Acting Assistant Administrator for Water.
[FR Doc. 04-16075 Filed 7-14-04; 8:45 am]
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